The Government of India had announced a SEZ scheme in April, 2000 with a view to provide an internationally competitive environment for exports. The objectives of SEZs include making available goods and services free of taxes and duties supported by integrated infrastructure for export production, expeditious and single window approval mechanism and a package of incentives to attract foreign and domestic investments for promoting export-led growth. Under the Act, SEZ could be set up either jointly or severally by the Central Government, State Government, or any person (including a private or public limited company, partnership or proprietorship).

• for manufacture of goods; or
• for rendering services; or
• for both manufacturing of goods and for rendering services; or
• as a Free Trade and Warehousing Zone

Benefits to SEZ Units

• Duty free import / domestic procurement of goods for development, operation and maintenance of SEZ units
• 100% Income Tax exemption on export income for SEZ units Section 10AA of Income Tax Act for first 5 years, 50% for next 5 years thereafter and 50% of the ploughed back export profit for next 5 years
• Exemption from minimum alternate tax under section 115JB of the Income Tax Act
• External commercial borrowing by SEZ units upto US $ 500 million in a year without any maturity restriction through recognized banking channels
• Exemption from Central Sales Tax
• Exemption from Service Tax

Benefits to SEZ developers

• Exemption from customs / excise duties for development of SEZs for authorized operations approved by the BOA
• Income Tax exemption on export income for a block of 10 years in 15 years under Section 80-IAB of the Income Tax Act
• Exemption from minimum alternate tax under Section 115 JB of the Income Tax Act
• Exemption from dividend distribution tax under Section 115O of the Income Tax Act
• Exemption from Central Sales Tax (CST)